Stocks Surge into the Close; Dow Registers Best Week Since June

By Avi Salzman

Stocks rose more than they have since early June this week, breaking a three-week losing streak and vaulting the Dow back over 13,000 at the close. On Friday, a middling-to-strong rally rose into an exuberant close, as the Dow climbed more than 50 points in the final half-hour of trading to close 173 points higher. Friday was a short day because of the Thanksgiving holiday, with markets closing at 1 p.m. EST.

The Dow rose 421 points on the week, or 3.4%, to close at 13,010. It was the index’s best performance since the week ending June 8. All 30 Dow stocks rose on Friday.

The S&P 500 rose 49.3 points on the week, or 3.6%, to close at 1,409. It was likewise the index’s best performance since the week ending June 8.

The week’s gains can be attributed to a shift in sentiment about the Fiscal Cliff negotiations — comments by leaders on both sides have made a compromise on a deficit deal seem more achievable. The week was also characterized by fighting in the Middle East, as bombs flew over Israel and Gaza. Nymex-traded crude oil rose $1.36 this week, or 1.6%, to $88.28 per barrel.

On Friday, investors may have gained confidence from the consumers who flocked to Black Friday sales, and from surprisingly strong economic data out of China and Germany.

Editor’s Note: This is my last day running the Stocks to Watch Today Blog for Barrons.com. Starting Monday, Marketwatch veteran Sam Mamudi will take over. I’ll be moving to Barron’s magazine to write stories about companies and sectors. It’s been a great pleasure running this blog for nearly two years, and I want to thank all the readers who have kept up with our coverage and sent in comments and tips. I can still be reached at avi.salzman@barrons.com or on twitter at @barronsstocks and @avisalzman. Enjoy the weekend!

There are 9 comments

NOVEMBER 24, 2012 5:04 A.M.

Anonymous wrote:

Nokia is now a good bargain buy and hold for the long term or medium term. Here are the reasons why:

1. Nokia Siemens Networks is profitable and growing strongly (over 300 million euros profit in 3Q). Nokia and Siemens have decided to make it independent in these few years, therefore Nokia shareholders will have two companies´ shares in their hands, quite a good bonus.

2. Navteq is profitable as well, and it is expanding its business as the world´s leading maps maker, with City Lens and Earthmine´s 3D mapping, Nokia will have a bigger slice of this pie yet.
Right now, Navteq already has big clients such as Yahoo, Facebook, Amazon, Oracle and almost countless car companies.

3. Nokia´s patent portfolio earns about 500 million euros a year.
Samsung is paying Apple for intellectual property rights; HTC is paying Apple; Vringo is suing ZTE; Nokia is suing HTC; and APPLE IS PAYING NOKIA FOR INTELLECTUAL PROPERTY RIGHTS!
Thus, it is only a matter of time when Nokia will sue Google and Samsung, if they still don´t agree to pay Nokia for its patents.

5. The only 1 out of 5 Nokia´s business parts, which is not profitable, is smartphone business, but
new Lumia generation looks promising.
Lumia 920 has features like:
Floating-lens PureView camera with optical image stabilization
Wireless charging
Super sensitive and bright screen that can be used with gloves or finger nails
Premium GPS that can be used also without internet
Augmented reality City Lens
Free music with no ads
NFC
Rich sound recording in vids
Fastest screen on a smartphone

Today, Yahoo-China site said that it has the approximate number of Lumia 920 that has been ordered from Nokia up to date, and it was about 2.5 million units. And this number of Lumias 920 alone is already close to the total number of all the Lumia variants sold in last quarter, 3Q12, which was 2.9 million units.

Nokia also bought Scalado, the imaging technology firm in Sweden. Therefore, apart from NAVTEQ and NSN, Nokia is no doubt going big with PureView imaging technology. Some authors compare Nokia to Kodak, I think it is almost the opposite.
Kodak was the old era and Nokia is starting the new evolution with smart-phone imaging, when consumers won´t have to carry another gadget (camera), for example during traveling.

It was not Damian Dinning who created PureView.
The 2 inventors are Juha Alakarhu and Eero Salmelin.
Nokia has bought the imaging technology company Scalado in Sweden, which is an expert in imaging, and of course there is also a head man in this company. Therefore, it is almost natural that Damian Dinning steps down.

6. Considering now the total loss is about 17 million euros, it got much better from the 290 million (2 prior quarters each) loss.
Nokia´s current 3.6 billion euros net cash should be enough for Nokia´s transitional period before WP8 phones take off.
Nokia is also getting more cash from convertible bonds and selling its headquarters and other non-core assets.

Morningstar´s analysis about Nokia:
Share price assumption at this moment: 2.40 euro.
Best scenario (if WP8 phones go well): the stock price will go to about 7.70 euro per share.
Worst scenario: no bankruptcy, because Nokia would be sold in parts before that.
Estimated price for this: intellectual properties over 1 euro per share; other business parts (smartphones, featurephones, NSN) at least over 1.50 euro per share.
And NAVTEQ´s price not included (Nokia bought NAVTEQ with 5.7 billion euro). All in all, even in this case, Nokia share price would be at least over 2.50 euro, excluded NAVTEQ.
In other words, the sum of parts of Nokia is worth much more than its market cap now, which means NOK share is right now heavily undervalued.

NOVEMBER 24, 2012 5:07 A.M.

Anonymous wrote:

Short interest as of the end of October had been running at around 313 million shares on a base of 3.75 billion shares outstanding, or roughly 8%.
This 8% is just the number in NYSE.
November 20, in Helsinki, the short interest was over 10% (and this number was only counted with the investors with over 0,5% short interest, because the law in EU does not allow to give the names of investors with less than 0.5% short interest).
Nokia´s 3.75 billion shares outstanding,
covers both Helsinki and New York.
In other words, the short interest in NOK has been around 20% on a base of 3.75 billion shares.
This is a significant figure to note, because for example, shares of Apple have been short sold only about 0.5%, Samsung over 2% and other telecom companies about 4% in general.
Therefore, the real short covering of NOK is still to come yet.

Damian Dinning is joining Jaguar Land Rover.
Here is his statement:
“As reported in Nokia’s own statement regarding my forthcoming departure, a number of key strategic roles have moved to Finland. My family and I are based in the UK at a stage in our lives where relocation is unfortunately not an option. I have therefore made the tremendously difficult decision after nearly 9 years with Nokia to leave the company. I am hugely proud of the work I have been involved with during my time at Nokia and feel privileged to have worked with some of the smartest people I’ve ever been fortunate enough to meet.

As reported by a few, the work area I am best known for, imaging, is the result of a huge and massively talented pool of people. I have often felt embarrassed by the media attention I received knowing that whilst I am proud of my own contributions and the forward looking guidance I have strived to provide the teams, there are a lot of unsung heroes!

I have known for some time that I would be leaving Nokia. I’ve spent many many months with this in mind, working with incredibly talented and highly motivated people across various teams building towards the next steps Nokia will take in imaging.”

Read more at pureviewclub site.

NOVEMBER 24, 2012 10:44 A.M.

idornedrienda wrote:

ok.

NOVEMBER 24, 2012 4:42 P.M.

Harrier wrote:

I believe the stock market will surpass its all time highs next year after the tax uncertainty is resolved. It is my hope this will also help the economy find a base to build more jobs....But we need to keep in mind there are still Financial reforms to stabilize the industry to prevent this horrible crisis from happening again.

About Stocks To Watch

Earnings reports, corporate strategies and analyst insights are all part of what moves stocks, and they’re all covered by the Stocks to Watch blog. We also look at macro issues, investor sentiments and hidden trends that are affecting the market. Stocks to Watch gives you the full picture of the U.S. stock markets, all day long.

The blog is written by Ben Levisohn, a former stock trader who has covered financial markets for the Wall Street Journal, Bloomberg and BusinessWeek.